Hitachi Ltd, Japan's third-biggest chipmaker, halted production of chips for cellular phones at a new plant in Japan and will trim operations at two plants in Europe because of sagging handset demand worldwide.
Hitachi will stop manufacturing at a plant in Yamanashi, near Tokyo, which began trial production of microcontrollers in January, spokesman Masanao Sato said.
Microcontroller production will also be slowed at two Hitachi plants in Europe, reducing combined output at the three plants to 13 million units a month from a planned 22 million, Sato said.
Mobile-phone makers worldwide have slashed forecasts for sales this year, with some analysts and manufacturers expecting shipments as low as 350 million units.
Nokia Oyj, which had forecast industry sales of as much as 500 million handsets, said recently the industry will post only modest growth.
Other Japanese chipmakers are also likely to follow Hitachi, analysts said.
"The environment is tough for all chipmakers right now and especially Japanese makers that focus soley on chips for mobile phones," said Yoshihide Ohtake, an analyst at Tsubasa Research Institute, who rates Hitachi "average."
"Other Japanese chipmakers may be wishing they could also trim production," he said.
Microcontrollers are used in integrated circuits found in cellular phones. Hitachi was making as many as several hundred thousand units a month in Japan, Sato said.
With mobile phone sales expected to lag forecasts, especially in Europe, Hitachi will not start full-scale production of the chips at the Yamanashi plant, he said.
Separately, Fujitsu Ltd said it may stop making flash-memory chips for cellular phones temporarily at two plants in September when it opens a new flash-memory chip plant elsewhere.
Fujitsu makes 14 million flash-memory chips at the two plants in Fukushima prefecture, north of Tokyo.
Flash memory, which is found in consumer products such as portable music players, digital cameras and electronic books, retains memory even when power is turned off.
Hitachi and Fujitsu join other chipmakers in Asia cutting production to adjust for lower sales to customers, or considering such a step.
Toshiba Corp, Japan's top chipmaker, is reducing investment in its semiconductor business by 29 percent this year.
Korea's Hynix Semiconductor Inc, the third-biggest computer-memory chipmaker, is considering cuts in an attempt to boost chip prices.
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